Re: [CANSLIM] WCOM restatement

From: "Tom Worley" <stkguru@bellsouth.net>
Subject: Re: [CANSLIM] WCOM restatement
Date: Wed, 26 Jun 2002 21:29:54 -0400

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I saw several reports that indicated they (WCOM) failed to follow GAAP. I
also saw one report in which Andersen defended themselves by saying they
didn't know what the CFO had done because they only looked at what the CFO
gave them (funny, I thought that was the job of the auditor, to look at and
investigate everything to be sure that all decisions taken throughout the
year were done correctly and according to GAAP, isn't that why we call it an
"audit" instead of a "rubber stamp party"??).

- ----- Original Message -----
From: <Spencer48@aol.com>
To: <canslim@lists.xmission.com>
Sent: Wednesday, June 26, 2002 9:28 AM
Subject: Re: [CANSLIM] WCOM restatement


Tom:

     I've heard on TV that it wasn't a "deviation" from GAAP.  From what I
understand, there are options that an accountant/bookkeeper can use, and
Anderson chose capital expensing what normally would be a regular expense
item.

     In my opinion, it was just a matter of time before such horrendous
manipulation of any company's books was discovered (The question isn't why
did it take so long to discover, but rather, what company will be the next
to
reveal that they falsified records.  And I wouldn't be at all surprised that
there are a lot of them out there.)

     Unfortunately, accountants have learned from lawyers how to obfuscate
the truth and maneuver the justice system in order that lying can be put in
the best possible light, and truth and accuracy can be avoided.  That's why
GAAP (I believe) covered up (instead of revealing) WorldCom's problems.

     As for CANSLIM:  I wonder how WON believes we can now fundamentally
analyze a company-especially after its been revealed that WorldCom's
Cash-Flow is bogus.  A few weeks ago, WON said: Look at the cash-flow to see
that earnings are really funneling down-into the bottom line.  Now what's he
going to say?  Probably, look at the managers of the companies to see if
they
have a history of dishonesty.

     Unfortunately, though, I don't believe that will cut it.  Even if the
manager is scrupulously honest, Enron and WorldCom teach us that that is not
enough.  The ACCOUNTANTS also must be honest.  So now will WON's injunction
be to:  Look at the history of the accounting firm, and the history of the
accountants employed by the accounting firm, who work on the company's
books?

jans




In a message dated 6/26/2002 12:53:51 AM Eastern Daylight Time,
stkguru@bellsouth.net writes:

<< once again, Andersen strikes again, this time by signing off on Worldcom
 hiding over $3 billion in expenses as capital expenditures, and thus
 inflating cash flow. Restatement expected to take away last five quarters
of
 profits and turn them into losses.

 Who gave this sanction to a deviation from GAAP (Generally Accepted
 Accounting Principles)?? >>

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